Canada: More time needed for license, seller protection changes

With a March goal for resolution already past, Canadian officials say they need more time to consider changes to the country’s produce licensing system and how possible new PACA-like financial protections might be implemented.

It may take several months or longer before new regulations are in place, sources said in late April.

Domestic and foreign sellers of produce in the U.S. have been able to use the U.S. Department of Agriculture’s Perishable Agricultural Commodities Act trust protection since the mid-1980s. That law allows produce sellers to be the first in line in the event of a bankruptcy of a U.S. produce buyer. The U.S. and Canadian trade have long desired a comparable system of risk mitigation in Canada.

The ambitious goal of a March 2013 finish date was noted in a 2012 progress report on the Canada-U.S. Regulatory Cooperation Council. The RCC was created in February 2011 by Canada’s Prime Minister Stephen Harper and President Barack Obama to promote cooperation among regulators in the two countries.

The RCC Joint Action Plan was published in December 2011, listing 29 initiatives where the U.S. and Canada sought greater agreement between regulatory approaches.

The goals included numerous food safety-related initiatives but also a goal for a financial protection to produce sellers in Canada that would be similar to the Department of Agriculture’s PACA trust in the U.S.

A spokesman for the government of Canada said options are still being considered for the licensing system and for possible plans to offer financial protection for produce sellers in Canada.

“The RCC process has allowed us to make solid progress in finding common ground to protect fresh fruit and vegetable growers and other sellers on both sides of the border from financial risk associated with issues involving payment,” Patrick Girard, senior media relations officer for Agriculture and Agri-Food Canada, Ottawa, said in an e-mail.

Canada has agreed to consider the development of a one-licensing only approach to the fresh produce trade, he said. Since 2000, produce operators in Canada have a choice to obtain their license through either through membership in the Ottawa-based Dispute Resolution Corporation or from the Canadian Food Inspection Agency.

The Canadian Food Inspection Agency, Girard said, is consulting with the industry on licensing requirements for produce dealers. The consultations are expected to be launched later this spring and will provide an opportunity for public comment, he said.

Girard said the government of Canada is also looking at the possibility of greater risk mitigation in the fresh produce sector, but has not finished its analysis of risk mitigation measures that go beyond licensing changes.

“We fully expect the outcome of this process will lead to improvements to the financial risk mitigation tools available to fresh produce sellers,” Girard said in the e-mail.

Industry observers were anxious for a solution but willing to wait for progress.

“From a U.S. perspective, I continue to be very optimistic,” Matt McInerney, executive vice president of Irvine, Calif.-based Western Growers. “There is no doubt the unified one-license approach is going to be a very important outcome,” he said.

He said that the licensing approach has a connection with the risk mitigation solution. McInerney said that while the USDA PACA system cannot be identically replicated in Canada, there’s no doubt that some provision can be created that gives some standing to sellers of perishable farm products.

“Without some risk mitigation solution, the RCC process would not be looked upon as a success from a U.S. perspective,” he said. McInerney said the U.S. industry and government representatives are ready to provide more information and counsel to their Canadian counterparts as the process continues.

Next steps in the process in the months ahead could be consultations between various Canadian government agencies about what a risk mitigation tool might look like in Canada. “This is a moment in time when we need to look at how it can be done, not how it cannot be done,” McInerney said.

Canadian officials are talking about the potential of finalizing the unified-license approach by 2015, said Fred Webber, chief executive officer and president of the Ottawa, Ontario-based Fruit and Vegetable Dispute Resolution Corp. While that approach could guide police the practices of the produce trade in Canada, Webber said a Canadian risk mitigation solution is still needed for those companies who go bankrupt.

Fine-tuning a risk-mitigation approach that will work with provincial and federal law is one of the big remaining challenges, he said. Webber said the government of Canada may have an update on the risk mitigation solution by sometime this fall.

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About the Author:

Tom Karst

Tom Karst is national editor for The Packer and Farm Journal Media, covering issues of importance to the produce industry including immigration, farm policy and food safety.
He began his career with The Packer in 1984 as one of the founding editors of ProNet, a pioneering electronic news service for the produce industry. Tom has also served as markets editor for The Packer and editor of Global Produce magazine, among other positions.
Tom is also the main author of Fresh Talk, www.tinyurl.com/freshtalkblog, an industry blog that has been active since November 2006.
Previous to coming to The Packer, Tom worked from 1982 to 1984 at Harris Electronic News, a farm videotext service based in Hutchinson, Kansas.
Tom has a bachelor’s degree in agricultural journalism from Kansas State University, Manhattan.
He can be reached at tkarst@farmjournal.com and 913-438-0769. Find Tom's Twitter account at www.twitter.com/tckarst.